Beer supply inquiry may be too late, says craft brewer

Craft brewer
Brad Rogers
says pubs and clubs are shifting away from tap contracts with the major brewers, suggesting that the competition watchdog’s inquiry into exclusive supply agreements may have come too late.

“There are lots of venues that are walking away from those various ­contracts from the likes of Lion, Foster’s and Coopers," said Mr Rogers, a spokesman for the Craft Beer Industry ­Association, and director of Byron Bay brewer Stone and Wood.

Coopers chairman
Glen Cooper
says the major brewers have become “far more aggressive" in pursuing control of beer taps through exclusive or restrictive supply agreements.

But Mr Rogers says the number of venues entering into exclusive agreements is declining as consumer tastes change and drinkers seek newer brews.

“A lot of venues are seeing the benefit of putting on smaller independent beers," he said.

“That opens up a lot more taps for a lot more independent brewers."

The Australian Competition and Consumer Commission has kicked off an inquiry into whether the major brewers are curtailing competition in the $2.5 billion draught beer market through exclusive supply agreements and tap contracts.

The inquiry is believed to have been triggered by a complaint to the ACCC from a small brewer unable to sell its beer because of restrictive supply agreements.

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But the ACCC’s inquiry may have come 10 years too late. Since selling their pub portfolios in 2003 and 2004, the major brewers have been sewing up beer volumes with exclusive contracts and generous rebates tied to volumes and levels of exclusivity.

The brewers also promote loyalty by providing fridges, servicing taps, and even offering to pay for refurbishments, according to a recent IBISWorld report.

The ACCC may crack down on these exclusive deals and offers if it finds they are uncompetitive.

The commission is seeking information from small brewers about their efforts to supply draught beer to pubs and asking brewers to identify venues that have declined to stock their brands.

Mr Rogers says Stone and Wood can’t keep up with demand for its bottled and draught beers.

The brewer, which also counts former Foster’s chief
Trevor O’Hoy
as a shareholder and director, is building a second brewery and production line, using funds raised from the sale of a 20 per cent stake formerly held by craft brewer Little Creatures, which is now owned by Lion.

“There are a lot of very good brewers and really good small brewers producing some really good beers," Mr Rogers says. “Venues need to put them on, so they aren’t entering into 100 per cent tap contracts any more," he said. “We’ve never had any knockbacks because of tap contracts."

Meanwhile, Foster’s/SABMiller plans to phase out the Bluetongue beer brand and close the $120 million Bluetongue brewery built by Coca-Cola Amatil and its former beer joint venture partner in 2010. CCA sold the brewery and its interest in the Pacific Beverages beer joint venture when SABMiller took over Fosters in 2011.

Foster’s CUB said the Bluetongue brand would be phased out over the next few months and the former ­Bluetongue brewery at Warnervale on the NSW central coast would close in the second half of 2014 with the loss of 64 jobs.

CUB will move the packaging machinery and storage tanks to its ­Yatala brewery in Queensland, increasing capacity, and eventually sell the land.

A CUB spokesman said Bluetongue couldn’t compete with CUB’s larger lager brands and sales had fallen since the SABMiller acquisition.